Which of the following statements about contingent liabilities is incorrect?
A. A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated.
B. A disclosure note is required when the loss is probable and the amount can be reasonably estimated.
C. A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated.
D. A disclosure note is required when the loss is remote and the amount can be reasonably estimated.

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ewomazinoade ewomazinoade · Answer 1 · 2019-11-07T07:54:33+01:00

Answer: D - A disclosure note is required when the loss is remote and the amount can be reasonably estimated

Explanation:

A contingent liability is an obligation that might arise from an event that would occur in the future.

A contingent liability isn't disclosed when payment is remote.

A contingent liability is recorded when:

1. it is probable the event would occur.

2. there is a reasonable estimate the amount of the loss.

I hope my answer helps.